The Dangote Petroleum Refinery has received four cargoes of crude oil from the Nigerian National Petroleum Company Limited (NNPCL) under the newly launched naira-for-crude sale agreement. Officials from the refinery and the Federal Government confirmed the development on Tuesday, marking a significant step in the government’s initiative to supply local refineries with crude oil using Nigeria’s local currency.
According to sources, the crude oil cargoes were delivered over the past three weeks, and the refinery is expecting additional shipments as the agreement progresses. The naira-for-crude programme aims to boost domestic fuel production by supplying Nigerian refineries with crude oil in exchange for local currency, reducing reliance on foreign currency transactions.
“The naira-for-crude deal has started, and the Dangote refinery has received four cargoes so far. More are expected in the coming weeks,” a senior official of the refinery said. The current phase of the agreement, which is set to last six months, may be extended depending on the government’s decision at the end of the trial period.
The refinery, located in Lekki and valued at $20 billion, is expected to begin the direct sale of refined petroleum products, including Premium Motor Spirit (PMS), to domestic fuel dealers in naira. This comes after initial challenges, with Dangote Group earlier accusing international oil companies (IOCs) of attempting to sabotage the refinery by withholding crude oil supplies.
In response to these challenges, the Nigerian government, led by President Bola Tinubu, implemented the naira-for-crude programme, with the Federal Executive Council approving the sale of crude to local refineries using the naira. The Dangote refinery, with a production capacity of 650,000 barrels per day, is currently the only petrol-producing facility in Nigeria under this arrangement.
President Tinubu proposed this solution to address the issue of inflated crude oil prices, which Dangote Group alleged were being driven up by IOCs. The new agreement allows NNPCL to supply 385,000 barrels of crude oil per day to the refinery, with payments made in naira. In exchange, the refinery is expected to release refined products, including petrol, diesel, and aviation fuel, for sale in the local market.
As the programme unfolds, industry observers believe that this initiative could stabilize fuel prices in Nigeria, particularly if the exchange rate for the deal is set favorably. Although the exact exchange rate for the naira-for-crude transaction has not been confirmed, operators suggest that pegging the exchange rate at N1,000 to a dollar could lead to a significant reduction in the price of petrol.
The refinery’s ability to supply the domestic market in naira is anticipated to ease fuel import costs and increase local fuel availability, bringing much-needed relief to Nigerian consumers and businesses.
